Monday, November 28, 2005

Wal-Mart Is Good for Poor People

Wal-Mart's critics allege that the retailer is bad for poor Americans. This claim is backward: As Jason Furman of New York University puts it, Wal-Mart is "a progressive success story." Furman advised John "Benedict Arnold" Kerry in the 2004 campaign and has never received any payment from Wal-Mart; he is no corporate apologist. But he points out that Wal-Mart's discounting on food alone boosts the welfare of American shoppers by at least $50 billion a year. The savings are possibly five times that much if you count all of Wal-Mart's products.

These gains are especially important to poor and moderate-income families. The average Wal-Mart customer earns $35,000 a year, compared with $50,000 at Target and $74,000 at Costco. Moreover, Wal-Mart's "every day low prices" make the biggest difference to the poor, since they spend a higher proportion of income on food and other basics. As a force for poverty relief, Wal-Mart's $200 billion-plus assistance to consumers may rival many federal programs. Those programs are better targeted at the needy, but they are dramatically smaller. Food stamps were worth $33 billion in 2005, and the earned-income tax credit was worth $40 billion.

Of course, I am not surprised that Wal-Mart benefits poor people by providing low cost goods, but why do liberals ignore everything other than Wal-Mart doesn’t pas its workers enough (in their opinion). Wal-Mart critics never compare it to similar businesses on any factual level, they just repeat over and over what Wal-Mart should be doing. Wal-Mart should pay their employees a living wage (whatever that is). Wal-Mart should provide health care to it’s workers (umm, they do). Wal-Mart shouldn’t under-price it’s competitors (where would all the poor people buy their stuff then?)

Wal-Mart opponents love to put Costco up on a pedestal as the model for all retailers, but tell me – would Costco be able to be so benevolent to their employees if their customer base had half average income?

HatTip: Cafe Hayek

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